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ARTICLE · 04 OCTOBER 2023

From FDICIA To Silicon Valley Bank: The Evolution Of The Systemic Risk Exception

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In this article, the author recounts the legislative history of the systemic risk exception from its creation in the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA).

United StatesConsumer Protection
Andrew Olmem
Andrew Olmem
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In this article, the author recounts the legislative history of the systemic risk exception from its creation in the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). The author also explains how the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 amendments to the systemic risk exception shaped the recent resolutions of Silicon Valley Bank and Signature Bank. The author concludes by noting that the use of the systemic risk exception to protect the uninsured depositors of those banks was not an exceptional action, but instead was consistent with the treatment of uninsured depositors in all but a few bank resolutions since 2008.

On March 12, 2023, Treasury Secretary Janet Yellen twice invoked the systemic risk exception under Section 13 of the Federal Deposit Insurance Act (FDIA)1 to authorize the Federal Deposit Insurance Corporation (FDIC) to provide financial support to protect the uninsured depositors of Silicon Valley Bank

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